San Diego Estate Planning Attorney Blog

Warren Burger, the esteemed jurist who presided over the Supreme Court for many years, apparently did not know how to write a will, let alone provide a good estate plan for himself. He left behind a hand-written will of only 176-words, perhaps half a page. There is no apparent living trust or other vehicle to avoid probate. He did not provide for estate taxes. He did not state the powers of his executors. His handwritten will merely names the executors and the recipients of his estate. Oy.

The result: many thousands of dollars in attorneys fees and many months of court process to wind up his estate.

The lesson: Even the Chief Justice of the U.S. Supreme Court should hire a good estate planning attorney.

A child of five would understand this. Send someone to fetch a child of five. - Groucho Marx

Beloved comedian Groucho Marx left more than a legacy of laughter behind him. He left a long and nasty dispute over his $2.6 million estate that lasted for years and pitted his children against his late-in-life lover, Erin Fleming. At the time of his death in August, 1977, Groucho was 86, Fleming was 36. In fact, his children became estranged even before his death over the tension between them. The children charged that Fleming exercised undue influence over an aged man who had suffered a stroke. There was no question that Fleming tended toward abusive conduct, calling Groucho names, manipulating him with tranquilizers. During the dispute, she hit a bailiff with her purse! Nonetheless, the fight was so ugly, so painful to both Groucho's children and his companion, that Groucho never could have intended such a mess to erupt after his death. Groucho's cynical outlook on people proved true, but this time it was not funny and deeply hurt the people he loved or at one time loved.
Why? What could have been done differently?

One has to think that a better estate plan could have mitigated the problem. Perhaps a plan that provided for an independent trustee to take over in the event Groucho became incapacitated would have prevented any attempt to cut out his family and give his estate entirely to his companion of only six years. Groucho loved Fleming, but Groucho was enfeebled by a stroke and hip surgery and Fleming was clearly abusive. A responsible trustee could have intervened and not only made better choices for the disposition of Groucho's estate but protected Groucho from the harm he suffered at Fleming's hands. Perhaps a will or trust package that mitigated the tension by giving some money to his children and/or charities would have softened the animosity. Even if Groucho were totally estranged from his children, the wiser course of action may have been to include them in the disposition of his estate to avoid a long and costly court battle. (Groucho died in 1977 and the court battle over his estate raged until 1983.)

The outcome could not have been what Groucho would have wanted. His children remained hostile to him for trying to leave everything to Fleming. Fleming lost the estate after being subjected to years of acrimonious fighting. Groucho's wishes were ultimately not respected. There were no winners. Better advice, better planning, better provision for care in advanced age - all could have prevented this tragedy.

An experienced Estate Planning lawyer can help you plan now for your future, so you can enjoy the present and avoid heartache and conflict for your loved ones in the future.

Mrs Smith came to my office. She had just lost her husband. It was a very hard time for her. She handed me a copy of the revocable living trust that she and Mr. Smith had paid a lawyer to help them set up some years ago in another state. After a little digging, and finally tracking down that out-of-state lawyer, who had moved to new offices in the meantime, I discovered the bad news. The Smiths had a very nice looking trust document, but it was nothing more than a small stack of paper. None of their assets had been transferred into the trust. So the trust was really nothing more than a very expensive stack of paper. We had to file a petition in probate court to name an executor and administer the estate according to the terms of the "empty" trust. The primary reason why people create revocable living trusts in the first place is to avoid the time and money associated with having to "probate" their estates. Here in California, attorneys fees for probate are set by statute at 4% of the estate. For a relatively modest $500,000 estate (remember the estate includes your home!), that means $13,000 in attorneys fees, and that doesn't include court fees, appraisal fees and other fees that might have to be paid. Now, I don't know what the Smiths paid for their trust, but chances are it wasn't more than $2,500, and had they actually funded their trust by transferring their home, bank accounts and any other assets into the trust, they might have spent a little more in filing fees, notary fees, etc. But they didn't. So instead of spending $2,700 or so to have the estate pass seamlessly to Mrs. Smith, the Smiths spent far more, and Mrs. Smith had to suffer through the time, expense and hassle of a lengthy court process in order to get everything transferred to her.

The bottom line is - if you have a living trust (and chances are, you should), you must take the final step of transferring your assets into the trust. In my estate planning law practice, we always assist our estate planning clients, not just with creating paper, but with making sure that their assets are properly transferred into the trust so that their trust is more than some very expensive paper.

As I've discussed before, an estate plan with a living trust generally avoids the whole process of probate court. Probate is a court process that involves lawyers - lawyers for the estate, and possibly lawyers for creditors disgruntled heirs and others arguing over who gets what or how much might be owed to creditors. The court is ultimately in charge of who gets what and when. Even if you have a well written will stating who gets what, who takes care of your kids, etc., and even if there are no creditors and no challeges, the court still must approve everything. This takes time. A lot of time. In many cases, the probate process takes a year or more - a year or more of court process for your loved ones and a year or more of delay in getting your money, house, property and the rest of your estate to the people you love.

Your family will not be terribly happy that they have to go to court to get what belongs to them, to get what you would want them to have. This delay alone could have a big impact on the people you love. The dollars that could be spent to invest in a home or education will be tied up. Instead of giving your kids and other loved ones a boost when they could need it, they will wait and suffer through the probate process. Time matters when money is concerned.

With a living trust in place as part of an overall estate plan, the money and the rest of your estate stays in the trust and passes seamlessly to those to whom you have named in the trust as your beneficiaries, avoiding probate altogether. That is not to say that there is no process or paperwork. Your trustee might have to record deeds, notify banks and insurance companies, and file tax returns, but there is no lengthy costly court process. The role of lawyers will be minimal and relatively inexpensive and relatively very fast as compared with probate. Save your kids and loved ones the pain and delay of probate with a good estate plan that includes a trust to pass your property immediately and without the "help" of many lawyers and a probate court.

If your total estate - cars, house, insurance policies, retirement accounts, everything - totals $100,000 or more, and you have not set up and funded a living trust, your estate will be most likely have to be administered through an expensive and very time consuming court process called Probate. You will have a plan, but it will be the government's default plan for you, not the one you necessarily want. Even more important, probate is costly.

In California, the probate code sets attorneys fees at the following percentages: 4% of the first $100,000; 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9 million, ½% of the next $15 million, and an amount to be determined by the court for amounts over $25 million. That's right. As a practical matter, since full probate is only required for estates equal to $100,000 or more, the MINIMUM attorney's fees in a probate matter are $4,000. For a very modest $200,000 estate, the attorney will take about $7,000. If you have a $500,000 estate (which is easier than you think if you own a home), the attorneys will take $13,000 out of the money that could otherwise go to your kids. And a $1 million estate (again, in California, not so uncommon given the price of real estate), attorney's fees would equal $23,000. By contrast, a complete estate plan including a living trust, prepared by an estate planning attorney usually costs $2,000 to $5,000 depending on complexity. And, let's not forget that the probate court itself also takes a chunk in fees to help cover its costs in administering and adjudicating your estate. An estate plan with a trust saves your kids and other beneficiaries a lot of money, potentially thousands of dollars. The math is pretty easy.

Probate also takes a long time, a year or more in many cases. The delay alone may represent a big cost to your loved ones, lawyer and court fees aside.

How does it work? Well, without getting into to much legal jargon, the trust owns your property and your named trustees (usually yourself while you are living) manage the trust. When you die, ownership of the assets remains with the trust and a successor trustee which you have named takes over to distribute the assets according to the directions you have given in the trust. There is no need for the probate court to be involved at all; thus the lengthy bureaucratic process and all the costs associated with it are avoided. No statutory lawyer fees. No year or more wait to distribute the funds. While there could be some trust administration issues to clean up, relatively speaking, you leave no hassle for the loved ones you leave behind.

A lot of people think that an estate plan is only for the extremely wealthy. The word
"trust" itself evokes thoughts of absurdly rich turn-of-the century robber barons. However, the current probate system in California means that a living trust is often the most cost-efficient way to pass on your money to your loved ones, and handle all the other important matters such as who will care for your children, manage their inheritance, and even who will care for your pets, much much more quickly and less expensively than you could without a trust. Here are the top reasons why you probably need a living trust as part of your estate plan:

1) Save money - potentially a lot of money - in lawyer fees and court costs.
2) Time - a trust passes on your money and property, in a much less time consuming manner than does a will or no estate plan at all
3) Incapacity - a trust is not just for death but also covers incapacity
4) Privacy - Your wishes in a trust can remain private, as they not made part of a public record in a court process.

In future posts, I will drill down into each of these reasons for creating an estate plan which includes a living trust, but for now, understand that it will save you money and get your money and the rest of your estate to your loved ones quickly. If you don't want your death or incapacity to trigger a potentially painful and definitely costly court process, you need a living trust as part of your plan.

Be sure to speak with your estate planning lawyer whether a living trust could be helpful for you and your family.

Audrey J. Grossman of the Grossman Law Firm will be speaking at National Business Institute's "Refining Estate Administration" seminar in San Diego, California on March 23, 2010.

About the Seminar: Are you equipped to efficiently take estates through probate while still preserving an inheritance for beneficiaries? Learn how to quickly resolve cases in probate, resolve accounting, tax and other estate administration issues, how to avoid probate and other valuable information relating to estate administration. Join us and receive practical procedural tips shared by experienced practitioners that will assist you in handling the critical details and functions of a successful probate practice.

March 23, 2010 at the Hilton San Diego Gaslamp Quarter: 401 K Street, San Diego, CA 92101. (619) 231-4040.

Registration 8:30 A.M - 9:00 A.M.
Program: 9:00 A.M. - 4:30 P.M.

This is an intermediate level seminar designed for those specializing in estate planning and administration. Seminar led by: Meredith G. Alcock, Esq.; Audrey J. Grossman, Esq.; David P. Jones II, Esq.; and, Daniel K. Printz, Esq.

6.0 units of CLE for Attorneys and Paralegals. 6.0 units of specialization in the area of estate planning for the California Board of Legal Specialization.

Cost: $339 first attendee; $329 each additional. Manual only: $99. CD and Manual only: $199.

Enroll now!

Even the King of Pop's Estate has its money worries. As a San Diego Estate Planning and Probate Attorney, I have followed news coverage of Michael Jackson's estate closely. Administrators of Michael Jackson's Estate have recovered money from former advisors, and entered into merchandising and other deals in order to marshall assets to cover debts which total in the hundreds of millions of dollars.

One of the core responsibilities of the executors or administrators of an estate is to inventory and collect assets and pay off debts, and in doing so to manage the estate in a prudent manner so as to preserve assets as much as possible for the beneficiaries.
As seen in the case of Michael Jackson, solvency isn't just a concern of smaller estates.

In my San Diego estate planning law practice, I advise my clients to carefully consider their choice of executor and trustee. Administering an estate or trust is a serious job with serious responsibilities, and should be given to someone with the skills and judgment to effectively manage the estate. One option to be considered is the appointment of a professional fiduciary (which could be a bank trust officer, financial advisor, attorney or other professional fiduciary) to serve either alone or as a co-executor or co-trustee along with a friend or family member.

I have learned many things from my Aunt Mimi: how to travel well, how to truly enjoy a nice glass of wine, an appreciation for great classical music. . . But one of the most valuable lessons she has taught me came after she was gone. I am a San Diego estate planning and probate lawyer and I have lots of experience advising clients regarding setting up wills and trusts, and administering probate estates and trusts. But when my Aunt Mimi passed away earlier this year, I was on the proverbial other side of the desk. I was the client. Mimi had named me and my sister as co-executors of her estate and co-trustees of her living trust.

Now my sister and I had the challenge that all of my clients have faced - to gather information and documentation of all of Aunt Mimi's assets and liabilities so that we could commence the arduous task of administering her estate. Mimi made that easy for us. Don't just stop at setting up an estate plan. Help your loved ones by taking these steps to get and stay organized:

1. Keep a list of all of your assets, and update it regularly: bank accounts, investments, real estate, insurance policies, vehicles, and other valuables.

2. Keep an up-to-date list of all of your financial advisors, brokers and insurance agents, with their information, and keep it up to date.

3. Keep an up-to-date list of your liabilities and the remaining principal balances: mortgages, credit cards, car loans, and other debts.

3. Name beneficiaries for your retirement accounts and insurance policies.

4. Talk to your named trustees, executors and attorneys-of-fact about your plans and give them copies of your estate planning documents.

5. Keep copies of your most recent bank and investment account statements, mortgage and other loan statements, in an organized file.

6. Keep copies of your tax returns for at least the past 2 years.

7. Prepare a "letter to your loved ones" summarizing your last wishes as well as information about all of your accounts, advisors and any other information that will help them administer your trust and estate, and give a copy to your executors and trustees.

8. Carry a wallet card with you that lists the contact information for the person whom you have designated in your medical directives, so that emergency medical personnel will know who to contact in the event of an emergency.

As a San Diego Estate Planning Attorney, I advise my clients that, if they have minor children, they MUST have an estate plan in place. period. A well-designed estate plan doesn't just state who will inherit your money and your belongings after you're gone. Most importantly, it will establish who will care for your children and how they will be provided for financially if you die or are unable to care for or provide for them due to illness or injury. Here are 10 simple elements of a well-designed estate plan for any California parent:

1. Set up a Revocable Living Trust now so that your estate won't be stuck in probate when you pass on.
2. Once you have set up your Revocable Living Trust, be sure to fund it!


3. Create pour-over wills naming guardians and successor guardians to care for your children when you're gone.


4. Also name temporary guardians - to care for your kids until the permanent guardians can take over custody. This is essential to avoid your children going into protective custody.


5. Name a trustee and successor trustee over your childrens' trusts who will be both responsible and caring in providing for your kids' financial needs.


6. Talk to your chosen guardians and trustees about your choices and your wishes for your children. You want to be sure they will accept the responsibility and will understand your wishes.


7. Carry a wallet card with you which includes up to date contact information for your childrens' temporary and permanent guardians, as well as your attorneys in fact, trustees and executors. If you suddenly become ill or injured, the police, EMTs, doctors and/or nurses need to know who to contact immediately.


8. Create a General Durable Power of Attorney, and a Medical Directive naming a person or people to make financial, legal and medical decisions for you if you are unable to do so. This will avoid conflict among your loved ones and help to guide them with difficult decisions in a time of crisis.


9. If you have pets, include them in your estate plan and consider a provision stating that your pets should be in the same household as your children. If your kids have lost you, you don't want them to lose their beloved pets as well.


10. Keep all of your financial information updated and prepare a list of all of your assets, accounts and professional advisors to make it easier for your family to handle your estate when your gone. You don't want your loved ones to have to dig through files and boxes looking for this information at such a difficult time.

A Los Angeles, California court recently established a conservatorship over actor Peter Falk, appointing Falk's wife as his conservator and granting visitation rights to his daughter.

What is a conservatorship? It is a formal legal proceeding in which a conservator - most often a spouse, partner, family member, close friend or professional caregiver - is appointed by the probate court to make decisions for an adult who is unable to care for or make decisions for themselves. In Falk's case, according to testimony from one of his doctors during the two-day conservatorship hearing, a conservatorship was needed because the actor suffered from advanced dementia, likely resulting from Alzheimer's disease.

A conservatorship is a very serious matter in that it actually removes or restricts the conservatee's rights relating either to his or her own personal care and health-care (Conservatorship of the Person), financial matters (Conservatorship of the Estate), or both (Conservatorship of the Person and the Estate). For a combined conservatorship of the Person and Estate, the court may appoint separate conservators for the person and for the estate, or a single conservator for both.

A conservatorship can be tailored to the specific needs of the person to be protected, and can be limited where, for instance, a developmentally disabled is able to manage certain aspects of their daily life and/or finances, but needs assistance with certain other matters. Another form of Conservatorship, know as an "LPS Conservatorship" is available for a person who is seriously impaired by a mental disorder and who may need to be admitted to a locked mental health facility.

While a Conservatorship is a useful and often necessary tool allowing you to care for and protect loved ones who are incapacitated, it is also costly, time-consuming and public. A person can take steps to avoid being placed in a conservatorship, or at a minimum designate the person who they would want to have appointed as a conservator, by working with an estate planning attorney to prepare a comprehensive estate plan which may include a durable general power of attorney, an advanced health care directive, a living trust and a will.

'Columbo' Star Peter Falk Placed Under Conservatorship, Entertainment Tonight, June 2, 2009

What will happen to your beloved dog, cat, bird, horse or other pet if you die or become incapacitated? If you live in California the best way to ensure that your pet is provided for in the event of your incapacity or death is to establish a "pet trust".

Unless specific written provisions are made, many pets end up being displaced and even euthanized when their owners die or are no longer able to care for them. According to 2nd Chance 4 Pets, a nonprofit organization in Los Gatos, Calif., that raises awareness of this problem, nearly 500,000 pets are killed in shelters and vet offices each year after their owners die.

California Probate Code Section 15212 provides for the creation of a trust for the care of a pet or other domestic animal, so that you can not only designate a guardian to care for your pets, but you can also leave money specifically designated for the care of Fido or Tabby. A trust for your pet is essentially no different than the more common trust for children: a legal document tied to a sum of money set aside in an account with a trustee to manage the account for the benefit of the pets.

But is a trust really necessary? Why not just ask a friend or family member to care for your pets, or add them to your will? The answer is that there is no way to ensure that the friend or family member will make good on their promise, or that they will have the financial means to provide the care that your pet will need. And because a will is only effective upon death, it won't help if you are incapacitated. Wills must also go through the probate process, which can be very lengthy and delay the carrying out of your wishes for your pet.

A California pet trust, on the other hand, can provide for your pets during your lifetime if you are unable to care for them, does not have to be probated, and can be enforced not only by the named trustee or guardian of your pet, but even by "any person interested in the welfare of the animal or any nonprofit charitable organization that has as its principal activity the care of animals." (CA PROBATE § 15212(c))

When you work with your estate planning lawyer to prepare your plan, please be sure not to forget your pets!